Business Insider/Samantha Lee
- Tesla shares are down 13% ahead of Friday's opening bell after the Securities and Exchange Commission sued CEO Elon Musk.
- The SEC alleges Musk made "false and misleading statements" about his claims he could take the electric-car maker private at $420 a share.
- The SEC also alleged Musk's tweets caused market chaos and investor harm.
- The SEC recommends Musk pay a penalty and seeks to bar him from being the head of a public company.
- Watch Tesla trade in real time here.
Tesla shares are getting slammed Friday morning, down more than 13%, after the US Securities and Exchange Commission sued CEO Elon Musk, alleging he made "false and misleading statements" in tweets on August 7 claiming he could take the electric-car maker private at $420 a share.
"Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions" the complaint said.
"When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a 'special purpose fund,' and had not confirmed support of Tesla's investors for a potential going-private transaction."
In its lawsuit, the SEC alleges Musk's tweets caused market chaos and investor harm and that the Tesla CEO had been vocal about his disdain for short sellers - or people betting shares would fall.
The SEC recommends Musk pay a penalty and seeks to bar him from being an officer or director at a public company.
Friday's selling has Tesla's stock on track to open near $270 a share, its lowest level since September 7. Should the sell-off intensify and shares were to close below $252.48, they would finish at levels last seen since in March 2017.
Tesla shares were down down less than 1% this year through Thursday.
Get the latest Tesla stock price here.